Student debt is becoming a huge problem, according to a study recently published by the Federal Reserve Bank of New York. The crisis, the bank makes clear, is not just a matter of how large the debt is (Americans now hold $870 billion in student loans) but the way people don’t seem to be making payments on it. But another study, published at the same time, seems to indicate the opposite. The true story depends on the assumptions you’ve got.

According to the Federal Reserve study:

We find that 27 percent of the borrowers have past due balances [of 30 days or more], while the adjusted proportion of outstanding student loan balances that is delinquent is 21 percent—much higher than the unadjusted rates of 14.4 percent and 10 percent….

In sum, student loan debt is not just a concern for the young. Parents and the federal government shoulder a substantial part of the postsecondary education bill. Moreover, the student loan delinquency picture is not fully captured in the broad statistics since a significant proportion of borrowers and balances are not yet in the repayment cycle. The implications of this last fact for future changes in the student loan delinquency rate are a very important area of research.

But not everyone seems to think this is a problem. The Wall Street Journal, for instance, helpfully ran a story yesterday by Christopher Shea suggesting that college students should borrow more money. Shea:

But what if the greater problem were that some people who should be taking out educational loans are failing to, or that borrowers aren’t borrowing enough?

A new analysis of student debt… stresses that most current educational borrowing is wise. An overemphasis in news coverage of students drowning in debt, argue Christopher Avery and Sarah Turner, in the latest issue of the Journal of Economic Perspectives, is scaring people away from taking on healthy debt. Art-history majors who are $100,000 in the red and unemployed exist, to be sure, but accepting them as typical amounts to a species of “cognitive bias,” Avery and Turner argue.

As Avery and Turner explain, “there is little evidence to suggest that the average burden of loan repayment relative to income has increased in recent years.” Overall, apparently, the ratio of student loan payments to income has “held steady at between 9 and 11 percent.”

And therefore, student loans are fine.

This is a little questionable, at least in part because the sourcing for this rosy information all comes from studies published from a period between 2003 and 2006, before the Great Recession.

The great big problem with this evidence, however, is that the ratio of student loan payments to income appears to take into account only people actually making student loan payments.

The Federal Reserve Bank study, however, indicates that some 27 percent of borrowers aren’t making payments on time. And 21 percent of of them just aren’t making payments at all.

Avery and Turner conclude that there’s no reason to think students are borrowing too much. “The claim that student borrowing is ‘too high’ across the board can—with the possible exception of for-profit colleges—clearly be rejected,” they write. Well, perhaps in some aggregate sense, but come on. At what point would there be a problem then?

At what level of average non-payment on student loans would student borrowing be too high?

Our ideas can save democracy... But we need your help! Donate Now!

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer